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Small Businesses

“How can arthritis make someone uninsurable, when 1/3 of older adults have
Keith Trickett, CEO of the Closet Factory

Keith has been operating the Closet Factory, a custom closet
design andmanufacturing service, for about six years.
I got into this business in the first place because I couldn’t afford health insurance for myself! I was ready to retire from a technology firm at age 60 when I discovered I would not be able to get any health insurance. At the time I had arthritis, and had just had my hip replaced… these conditions made me “uninsurable.” A broker told me I COULD get health insurance if I had my own company. So I bought this franchise. It’s an odd reason to start a business, I suppose. How can it be that health insurance is one of the reasons people can’t retire around here?

Keith would like to cover his workers…
Keith would like to insure all of his workers and their families but he cannot afford to do this without a significant employee contribution. Now, Keith provides health insurance for employees who have worked in the Closet Factory shop for two years or more. He has offered to pay a small portion of the premium to help his other employees obtain coverage before they have put in their two years, but so far no one has been able to take him up on his offer. Payroll already takes up 25% of our expenses. If I had to pay any more (like for health insurance), I would have nothing left.

Keith makes family coverage available, but the employee has to pay 100% of that premium. As a consequence, none of his workers opt for family coverage and they have many uninsured family members. This means that one illness in the family affects the availability of my staff. I see my employees worrying a lot: what if my kids get sick?


The Patient Protection and Affordable Care Act will help Keith Trickett and his business in several ways:

First, as someone with a pre-existing condition: Beginning in 2014, new rules will end medical underwriting and pre-existing condition exclusions. Insurers will be prohibited from denying coverage or setting rates based on health status, medical condition, claims experience, genetic information, evidence of domestic violence, or other health-related factors. Premiums will vary only by family structure, geography, actuarial value, tobacco use, participation in a health promotion program, and age (by not more than three to one).

Second, as self employed or small business owner: Starting this year, businesses with 10 or fewer employees and annual average wages of less than $25,000 will be eligible to receive a 35 percent tax credit. The credit decreases as the number of employees and the annual average wages increase. It is eventually phases out at 25 employees and a $50,000 annual average wage. Nonprofit businesses are also eligible for credits starting at 25 percent. In order to participate, the business owner must pay at least 50 percent of the employee’s premium.
This system will only be in place until 2014, when the state-based exchanges are implemented. At that point, only small businesses that participate in the exchanges will be eligible for the credit, but the credit will be higher—up to 50 percent for private companies and 35 percent for nonprofits. For many small business owners, the passing of health reform means they will finally have a chance to offer affordable insurance not only to their employees, but to themselves as well.